A new report from a European association of regional film funds says too many films are being made without enough platforms to release them.

Europe's film industry must face up to the changing realities of finance and distribution if it is to avoid a business crisis, says the report by Cine-Regio.

Conventional distribution platforms are shrinking, and yet much of the surplus is publicly funded.

Distribution models that continue to rely upon increasingly outmoded marketing tools, such as release windows and territorial rights, are under growing pressure as online and other new media platforms change the business landscape, says the report "Digital Revolution Engaging Audiences" released Tuesday at the Berlinale.

"The reality of the European film industries is that they are facing genuine threats," the report says.

"Between 2005 and 2010 the number of feature films produced in Europe increased by more than 28% while admissions for the same period fell, DVD declined and film was pushed to the outer edges of the program schedules."

Film professionals, fund chiefs and public policy makers need to learn the lessons of the music and other media industries to engage the audience in new ways through a multitude of platforms.

Charlotte Applegren, Cine-Regio's general secretary, said, "European film industries need more than ever a holistic view of strategy, a changed mindset, new skills and a sense of direction which is all together missing today. Innovation needs to be put into action."